Private Credit in 2024

Private Credit is essentially the provision of loans by non-bank lenders, and investment in them by retail and wholesale investors via fixed income products. These investments are distinct from traditional mortgage bonds by being private and not public holdings and largely untraded, similar but not identical to investments in unlisted asset-backed and mortgage secured mortgage funds in Australia, as with Semper.

The private credit market in Australia is estimated to be greater than $600 Billion as of 2023 (Reuters), as private credit’s market share of the loan market, particularly in commercial and development finance, outstrips banks’ appetites to lend.

The acquisition of former Credit Suisse warehouses to non-bank lenders by the US private credit and alternate asset class manager Apollo Global Management, is an indication of what we expect will be a continuing influx of global investment capital into this growing sector of the market. Further, increasing inflows of capital from Asian wholesale and institutional investment and sovereign wealth funds demonstrates increasing confidence in the Australian property, and property finance market.

Domestically we can expect competing energies in fund raising activities and a decreasing reliance on bank warehouse funding as lender / investment managers gain greater access to alternate direct-to-investor funding and funds offering a wider risk appetite to those from bank warehouses. We also anticipate the emergence of new funding platforms. In this regard the greatest opportunity will be presented by platforms with the widest reach to the lowest cost capital – retail investors. Low-cost capital achieves the highest possible envelope of risk and results in a much broader opportunity for product versatility and loan tenure, hence it provides greater scalability to volume.

All these factors demonstrate a continuing maturing of the private credit market in Australia and the benefits this will provide brokers, aggregators and borrowers will be an increasingly profession non-bank sector offering a wider array of products and services at increasingly competitive rates.

Semper continues to source and secure funding lines to grow its products and reduce its pricing. As we do so our appetite for mortgage-secured risk will evolve. For now, our sweet spot is in extended metro completed properties, or property stocks, and loans from $1 million to $10 million. This is where our pricing is very competitive.

To discuss your scenario, please reach out at enquiries@sempersecured.com.au or call us on 1800 SEMPER